Note M — Retirement and Savings Benefit Plans

VF has several retirement and savings benefit plans covering eligible employees. VF retains the right to amend any aspect of the plans, or to curtail or discontinue any of the plans, subject to local regulations.

Defined Benefit Pension Plans:    VF sponsors a noncontributory qualified defined benefit pension plan covering most full-time domestic employees employed before 2005 and an unfunded supplemental defined benefit pension plan that provides benefits earned that exceed limitations imposed by income tax regulations. VF also sponsors contributory defined benefit plans covering selected international employees. Defined benefit plans provide pension benefits based on compensation and years of service. The components of pension cost for all defined benefit plans were as follows:

The actuarial assumptions presented above relate to domestic defined benefit plans, which comprise approximately 93% of total plan assets and projected benefit obligations at December 2011. For international plans, assumptions reflect economic circumstances applicable to each country.

The following provides a reconciliation of the changes in fair value of the pension plans' assets and projected benefit obligations for each year, and the plans' funded status at the end of each year:

Accumulated benefit obligations at any pension plan measurement date are the present value of vested and unvested pension benefits earned through the measurement date, without projection to future periods. Projected benefit obligations are the present value of vested and unvested pension benefits earned, with projected future compensation increases.

Deferred actuarial losses result from differences in any year between actual results and amounts estimated using actuarial assumptions. These amounts are deferred as a component of Accumulated OCI and amortized to future years' pension expense. These unrecognized actuarial gains and losses are amortized as follows: amounts in excess of 20% of projected benefit obligations at the beginning of the year are amortized over five years; amounts between (i) 10% of the greater of projected benefit obligations or plan assets and (ii) 20% of projected benefit obligations are amortized over the expected average remaining years of service of active participants; and amounts less than the greater of 10% of projected benefit obligations or plan assets are not amortized. Deferred prior service costs are also recorded in OCI and amortized to future years' pension expense. The estimated amounts of Accumulated OCI to be amortized to pension expense in 2012 are $70.5 million of deferred actuarial losses and $3.2 million of deferred prior service costs.

Management's investment objective is to invest the plans' assets in a diversified portfolio of securities to provide long-term growth in plan assets that, along with VF contributions, will meet the plans' benefit payment obligations. Investment strategies focus on diversification among multiple asset classes (in accordance with the target allocations presented below), a balance of long-term investment return at an acceptable level of risk, and liquidity to meet benefit payments. Plan assets are generally liquid securities diversified across equity, fixed income, real estate and other asset classes. Funds are allocated among independent investment managers who have full discretion to manage their portion of the investments, subject to strategy and risk guidelines established with each manager. The overall strategy, the resulting allocations of plan assets and the performance of individual investment managers are continually monitored. Derivative instruments may be used by investment managers for hedging purposes and by the commodity investment manager to gain exposure to commodities through the futures market. There are no investments in VF debt or equity securities and no significant concentrations of security risk.

The expected long-term rate of return on the plans' assets was based on an evaluation of the weighted average of the expected returns for the major asset classes in which the plans invest. Expected returns by asset class were developed through analysis of historical market returns, current market conditions, inflation expectations, and equity and credit risks. The target allocation of investments by asset class for the domestic defined benefit plan in 2012 is provided below:

The fair value of investments held by VF's pension plans at December 2011 and 2010, by asset class, is summarized below. See Note T for a description of the three levels of fair value measurement hierarchy. Level 2 securities generally represent institutional funds measured at their daily net asset value derived from quoted prices of the underlying investments.

VF makes contributions to its pension plans sufficient to meet minimum funding requirements under applicable laws, plus discretionary amounts as considered prudent. VF made discretionary contributions of $100.0 million and $200.0 million to the domestic qualified defined benefit plan in 2010 and 2009, respectively. VF is not required under applicable regulations to make a contribution to the domestic qualified defined benefit pension plan during 2012. VF does not currently plan to make any contributions to the domestic qualified defined benefit plan during 2012, but continues to evaluate whether discretionary contributions would be appropriate. VF intends to make contributions totaling approximately $13.6 million to the other pension plans during 2012. The plans' estimated future benefit payments are approximately $71.0 million in 2012, $73.3 million in 2013, $77.6 million in 2014, $80.7 million in 2015, $83.8 million in 2016 and $471.7 million for the years 2017 through 2021.

Deferred Compensation Plans:    VF sponsors a nonqualified retirement savings plan for employees whose contributions to a tax qualified 401(k) plan would be limited by provisions of the Internal Revenue Code. This plan allows participants to defer receipt of a portion of their compensation and to receive matching contributions for a portion of the deferred amounts. Expense under this plan was $4.3 million in 2011 and $3.9 million in each of 2010 and 2009. Participants earn a return on their deferred compensation based on their selection of a hypothetical portfolio of publicly traded mutual funds, a fixed income fund and VF Common Stock. Changes in the fair value of the participants' hypothetical investment selections are recorded as an adjustment to deferred compensation liabilities, with an offset to compensation expense in the Consolidated Statements of Income. Deferred compensation, including accumulated earnings on the participant-directed investment selections, is distributable in cash at participant-specified dates or upon retirement, death, disability or termination of employment. Similarly, under a separate nonqualified plan, nonemployee members of the Board of Directors may elect to defer their Board compensation and invest it in hypothetical shares of VF Common Stock. VF also has remaining obligations under deferred compensation plans of acquired companies. At December 2011, VF's liability to participants in all deferred compensation plans was $222.0 million, of which $25.6 million was recorded in Accrued Liabilities (Note J) and $196.4 million was recorded in Other Liabilities (Note L).

VF has purchased (i) publicly traded mutual funds, a fixed income fund and VF Common Stock in the same amounts as most of the participant-directed investment selections underlying the deferred compensation liabilities and (ii) variable life insurance contracts that, in turn, invest in institutional funds that are substantially the same as other participant-directed investment selections. These investment securities and earnings thereon, held in an irrevocable trust, are intended to provide a source of funds to meet the deferred compensation obligations, subject to claims of creditors in the event of VF's insolvency, and an economic hedge of the financial impact of changes in deferred compensation liabilities. VF also has assets related to deferred compensation plans of acquired companies. At December 2011, the fair value of investments held for all deferred compensation plans was $205.4 million, of which $24.0 million was recorded in Other Current Assets and $181.4 million was recorded in Other Assets (Note H). The VF Common Stock purchased to match participant-directed investment selections is treated for financial reporting purposes as treasury stock (Note N), which is the primary reason for the difference in carrying value of the investment securities and the recorded deferred compensation liabilities. Realized and unrealized gains and losses on these investments (other than VF Common Stock) are recorded in compensation expense in the Consolidated Statements of Income and substantially offset losses and gains resulting from changes in deferred compensation liabilities to participants.

Other Retirement and Savings Plans:    VF also sponsors 401(k) plans as well as other domestic and foreign retirement and savings plans. Expense for these plans totaled $16.9 million in 2011, $14.6 million in 2010 and $13.3 million in 2009.